Airbus -the European aircraft’s recent major announcement of a reduction in R & D budgetary outlay as a hedging strategy in the light of weak USD is wise. But their plans of cutting 10,000 jobs by 2010, needs rethinking because trained work force is an asset to any company. Initial cuts in the workforce will be beneficial but those gains are transient. The main culprit that eats away the profit is maintenance cost not the wage outages.
Airbus’ business will boom in the coming years due to the demand for aircrafts from emerging markets and the Middle East. If it was demand for railway stations in 20th century, airports have taken that place in the 21st. The market strategy employed by Airbus is not in sync with the ethos of Europe’s way of doing business but it is that of the U.S.A. Setting such precedent will only help to maim the economy which has shown some recovery since 2006. Lay offs and lay off plans are not unheard of in the European economy, but when a business house with a clear future does so, it is unsolicited.
What if the USD stagnates and goes down? Is that a death knell to the world economy? That’s what some experts suspect, but the truth is, there is always money in the market but it should be tapped methodically and should give an adequate amount of time to regenerate. To sum up, stick to the European fundamentals of doing business, the economy is very much in the groove and it is just a matter of time to get back her lost glory.